Rational Irrationality, written by Zheng Yuhuang, a doctoral supervisor of marketing in Tsinghua University, and Sultan, a doctor of media studies at New Jersey State University in the United States, combines psychology with the laws of economic operation. From the perspective of human irrationality, this book explains 1 rules of behavioral economics through many rich cases close to life, and deeply analyzes 1 psychological traps lurking in people's daily lives.

1. Rationality is relative, and absolute irrationality

The most basic premise assumption in western economics is the "rational man hypothesis", that is, the economic behavior taken by everyone engaged in economic activities is to try to obtain their maximum economic benefits at their own minimum economic cost. But in fact, due to the asymmetric effect of market information, a completely "rational person" cannot exist and can only be regarded as an abstract concept in theory. Although unwilling to admit it, it is difficult for people to make every decision at the rational level because of the subtlety of feelings and the complexity of human nature. The motivation of life comes from the ups and downs of emotions and impulses under the calm appearance, and also from the hidden weaknesses and shortcomings of everyone. It is these "irrational" emotions and feelings that make us behave irrationally, although we may subconsciously think that we are making decisions rationally.

Second, the top ten psychological traps

The author lists the top ten psychological traps through rich and informative cases:

1. Contrast effect

Contrast effect refers to our perception of a thing, which does not depend entirely on it, but on what it is put with. Whether a thing is attractive or not is often due to the "foil" of things around it. For example, a 1 yuan-worth jacket was unsalable. In order to promote sales, a slightly inferior jacket was placed next to this jacket and the price was 1,5 yuan. In contrast, that 1 yuan jacket appeared to be of high quality and low price, thus becoming a best seller.

2. evaluation effect

when people judge an object, they can be divided into two situations according to the evaluation mode of decision-making situation: individual evaluation without comparison object and joint evaluation with comparison object. When evaluating separately, people are concerned about whether the object itself is good or not; In the joint evaluation, people are concerned about whether the object is better than other reference objects. Different evaluation models may further lead to people's completely different evaluations of the same object under different evaluation models. For example, high-end fashion and luxury goods mostly have their own separate sales channels, while those relatively ordinary and cheap goods are dazzling in supermarkets. Different product combinations are carried out to improve consumers' chances of buying them.

3. Compromise effect

When people make choices with uncertain preferences, they often prefer the middle option, because the middle option can make us feel safe and avoid making serious decision-making mistakes. In other words, people tend to pursue the "golden mean" when choosing products. For example, the price list given to you by Tony, a barber shop, distinguishes between ordinary hairdressers, senior hairdressers, senior hairdressers and store managers, and most people will not choose the cheapest one.

4. Sunk cost effect

It is easy for people to continue to invest in something because of their previous investment, even if they continue to invest, they may lose more. In other words, people don't measure the gains and losses from the present perspective, but include all the costs that have occurred in the past. Therefore, even if they have to face more losses, people choose to continue to bear the losses because they are distressed by the original expenses, and they also invest more. For example, for the same stock, if the price people bought in the past is higher than the current share price, most people believe that the stock will rise again in the future, so they are not only reluctant to "sell out", but are more willing to "cover up". However, if they have not bought the same stock at a high price in the past, people will judge whether the stock will increase in price in the future more objectively.

5. Loss avoidance effect

When the expression of choice focuses on "income", people tend to reduce risks and choose the income mode as safe as possible; When the selected watch focuses on "loss", people's risk-taking tendency will increase. In other words, people's risk tolerance to "gains" and "losses" is asymmetric, and their sensitivity to "losses" far exceeds their desire for "gains". For example, health care industry's profit is based on the fear brought by various diseases and "sub-health".

6. Endowment effect

After people have something, it is not easy to give it up voluntarily. People tend to think that what they have is more valuable than what others have the same thing. In other words, ownership will change our subjective perception of the value of this thing, make it difficult to give it up and let it go, and make us pay a higher price for it. For example, car owners who sell used cars will think that their cars should be higher than the market price.

7. mental account effect

people will classify money and assets separately and treat them differently, and establish various "accounts" for them in their minds, so as to manage and control their consumption behavior. For example, the "gift marketing", which is often called "ritual sense" now, must be a special expense in festivals. Most people will not buy this expense at ordinary times, but they can accept it as a gift.

8. transaction utility

when consumers buy a commodity, they will get two kinds of utility at the same time: acquisition utility and transaction utility. Among them, the utility depends on the value of the commodity to consumers and the price consumers pay for it; The effectiveness of the transaction depends on the difference between the price paid by the consumer to buy the commodity and the reference price of the commodity, that is, whether the transaction has obtained preferential treatment. For example, "Double Eleven", "618" and the live broadcast of the anchor will guide consumers to go shopping crazily and even buy things they don't need.

9. anchoring effect

when the value of an item is unknown, in order to give a quotation, people need to rely on a certain benchmark price. The so-called "anchor" is our first impression of things. The result of anchoring effect is that people rely too much on the first impression in judging things. Even though we know that relying on the first impression is not scientific and accurate, we can't get rid of the influence of the first impression after all. For example, in the clothing market where counter-offer can be made, the boss tends to make a high offer.

? 1. Overconfidence Effect < P > More than 7% of people will give a high evaluation when measuring their various qualities. Even those who usually keep a straight face and can't laugh think that their sense of humor is better than that of ordinary people. Overconfidence will increase a person's ability, and only those who are sure and truly believe that they will win will show an unquestionable chance of winning, but overconfidence will also easily distort the judgment of the real situation and make unreasonable predictions. For example, after the subprime mortgage crisis, many fund managers and CEOs of investment companies would rather resign and shut down their companies than admit that they had done something wrong.

Third, some feelings

The biggest feeling after reading this book is that the routine of business operation is too deep. The essence of business operation is to grasp human nature. People are always guided by some seemingly reasonable laws to make irrational behaviors. Only by knowing themselves, others and routines can they really walk freely in the social jungle.